FCA steps in early over interest-only mortgage time-bomb

By Huw Jones

LONDON (Reuters) - The Financial Conduct Authority (FCA) has asked mortgage lenders to check if customers can pay back the loans, stepping in early to head off possible defaults in a sector the government sees as key to reviving growth.

The FCA said the capital on 2.6 million interest-only home loans will be due for repayment over the next 30 years, with 10 percent of those having no strategy for paying back the money.

Nearly half of the loans, which only pay off the interest on the loan and not the capital, face a shortfall averaging 71,850 pounds, with customers "over-optimistic" about their ability to pay, the watchdog said.

The FCA was launched last month with a specific remit to protect consumers and end a history of mis-selling financial products, including endowment mortgages and pensions, stretching back two decades or more.

The FCA aims to head off problems earlier, rather than waiting for problems to gather critical mass before intervening, as regulators did in the past.

The sluggish economy's squeeze on household income is already prompting some borrowers to switch to an interest-only mortgage because of the lower monthly payments.

Interest-only mortgages allow home buyers to only repay the interest each month, has been sparked by a crackdown on affordability checks, due to come into force next year.

"By acting now we are aiming to nip this problem in the bud," FCA chief executive Martin Wheatley said in a statement.

Britain's Council of Mortgage Lenders said its members will be stepping up contacts with borrowers of interest-only loans.

"Most people, even if they have not yet done so, have time to plan a satisfactory strategy for when their mortgages reaches maturity," CML director general Paul Smee said.

FCA officials said lenders will ask their customers if they could afford to switch to a standard home loan where monthly repayments include interest and capital.

The watchdog has been given new powers to ban products but for now is holding back on introducing mandatory rules.

Instead, it has set out guidance on how lenders should deal with interest-only mortgage customers who risk being unable to pay back the capital.

Wheatley has in the past described interest-only home loans as a "ticking time-bomb", but banks, who already face a compensation bill of over 12 billion pounds for mis-selling loan insurance, will be relieved by findings on interest-only loans.

Two studies commissioned by the FCA and released on Thursday do not point to a new mis-selling scandal brewing, and show there has been no surge in complaints, a classic indicator of a serious problem, the watchdog said.

Only 2.5 percent of customers with interest-only mortgages said they were not aware they needed a repayment plan and don't have one in place, the FCA studies showed.

Tighter rules on all home loans will be introduced in April 2014 by the FCA, such as closer scrutiny of a borrower's ability to repay the money.

Many banks no longer offer interest-only mortgages and those that still do have tightened their conditions.

(Reporting by Huw Jones; Editing by Louise Heavens)

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Egypt steps up campaign against TV satirist

CAIRO (AP) — Egyptian authorities on Tuesday stepped up a campaign against a popular TV comedian accused of insulting the president, threatening to revoke the license of a private TV station that airs his weekly program and angrily dismissing U.S. criticism of legal proceedings against him.

The satirist, Bassem Youssef, was questioned by state prosecutors earlier this week over accusations that he insulted Islamist President Mohammed Morsi and Islam. On his Jon Stewart-inspired show, Youssef frequently satirizes everything from the president's policies to his mannerisms, as well as hardline Islamic clerics, while highlighting contradictions in their comments.

The questioning of Youssef, along with arrest warrants issued days earlier against five anti-government activists on charges of inciting unrest, have raised warnings by opponents of Morsi of a campaign to intimidate his critics. A new case was opened Tuesday, with prosecutors looking into whether participants in a talk show on another private channel who criticized the Youssef case "endangered national security."

Morsi's supporters deny any campaign, saying prosecutors are merely enforcing the law and insisting that Youssef has crossed the line with his mockery.

The Youssef case turned into a side spat with Washington after U.S. State Department spokeswoman Victoria Nuland on Monday spoke of a "disturbing trend" of growing restrictions on freedom of expression in Egypt, pointing to the questioning of Youssef and the arrest warrants.

"There does not seem to be an evenhanded application of justice here," Nuland added, saying the Egyptian government has been slow to investigate police brutality or attacks on anti-Morsi protesters and journalists.

The Muslim Brotherhood's Freedom and Justice Party denounced Nuland's comments as "blatant interference" in Egypt's internal affairs.

Morsi's office joined in, criticizing the U.S. Embassy in Cairo after it tweeted a link to Monday night's episode of The Daily Show, in which host Stewart came to the defense of Youssef and criticized the Egyptian president, saying it was undemocratic to prosecute the Egyptian comic.

Replying to the embassy on Twitter, the presidency wrote, "It's inappropriate for a diplomatic mission to engage in such negative political propaganda."

Meanwhile, Egypt's top prosecutor, a Morsi appointee, asked state security prosecutors to investigate the head of another private TV network, ONTV, a presenter of a show on the network and a phone-in guest to the show over complaints they "disturbed public security" and insulted the judiciary, the state daily Al-Ahram and the Committee to Protect Journalists said.

The complaint was prompted when the guest, Shaimaa Abulkhair, a consultant with the New York-based CPJ, criticized the case against Youssef.

Morsi's government has sought to distance itself from the legal proceedings against Youssef, and the prosecutor's office has said it is not acting on the president's behest. Information Minister Abdel-Moneim Abdel-Maqsoud said the complaints against Youssef's show came from private citizens concerned over the prestige of Egypt's first freely elected president.

"Some of it (Bassem Youssef's criticism) is permissible. And some isn't. Some of it contradicts the morals of Egyptian society," Abdel-Maqsoud, a member of the Muslim Brotherhood, said in a TV interview, professing his commitment to freedom of expression.

The government Investment Authority, which grants operating licenses to private TV networks, threatened to revoke the license of the CBC network that airs Youssef's show over what it called the show's violations of standards.

It said it has received complaints that in his program — titled "El-Bernameg," Arabic for "The Program" — Youssef ridiculed and insulted "symbols of the nation and prominent figures" and used sexual innuendos and indecent language. It said these acts violated rules against airing material not conforming with society's values and objectivity and warned that it would consider revoking the license if "the causes of the violations are not eliminated."

Bassem's show, aired every Friday, is preceded by a warning that it may contain "unsuitable content" and that it is only for viewers over the age of 18.

A trained heart surgeon, Youssef started his program online during the 2011 popular uprising that toppled Hosni Mubarak. Since then he has become a sharp critic of Morsi, his Muslim Brotherhood and the Islamists — though he also regularly jibes against opposition figures as well.

In his questioning, Youssef was asked about an episode in which a guest comedian mocked people who build mosques just to escape real estate taxes — apparently one basis for the "insulting Islam" charge, according to Abulkhair, who attended the questioning.

He was also asked about a show in which he satirized a TV interview by Morsi on the night of the Oscar awards ceremony. In the bit, Youssef awarded Morsi a "best actor" prize for seeming to evade questions and gave the interview itself "best montage" for several visible cuts and edits.

Youssef was released on bail Sunday after the questioning while prosecutors decide whether to pursue charges.

In its reply Tuesday to the U.S. State Department, the Brotherhood's party said it received Nuland's comments with "extreme reservation."

It said Nuland gave the impression that "the issue is to do with insulting the president when in fact the core of the complaints is to do with contempt for the Muslim faith and ridicule of religious practices."

"If proven, this contempt constitutes a grave breach of the law, customs, social and cultural constants in the Egyptian society," the party said in a statement.

It made no mention of Nuland's comment on the slow pace of investigation into cases of attacks against anti-Morsi protesters and reporters or police brutality. Critics have said the addition of the insulting Islam charge against Youssef likely aims to taint him in the eyes of Egyptian Muslims.

Nuland dismissed the party's criticism, saying her comments reflected the U.S. government's position.

"Our point here yesterday was to say that rule of law needs to be applied appropriately in all circumstances. It's the same point that we make with regard to countries around the world. So no, we reject the notion that we were interfering," she said.

Youssef denies the charges of contempt for religion.

"Islam is a wonderful religion, it's a great and peaceful religion," Youssef, a Muslim himself, told CNN this week. "There are some people who claim to be the sole (representatives) of Islam; they are actually giving a bad image, and they're basically insulting the image of Islam."

The moves against Youssef and the activists come amid an intense polarization in the country between Morsi's Islamist backers and his opponents. Morsi's nine months in office has seen the country plunging deeper into an economic crisis, surging crime rates and a seemingly endless series of protests, strikes and deadly riots.

The Egyptian leader accuses the media and politicians he has not named of inciting violence and charged that foreign powers, which again he has not named, of meddling in the country's internal affairs. Islamist supporters of the president have increasingly called for action against the media, at one point holding a sit-in outside of TV network studios.

The New York-based Committee to Protect Journalists called the escalation of anti-press "rhetoric" by Morsi and his supporters "deeply troubling."

One of Youssef's attorneys, Gamal Eid, said his case fits into a widening campaign against government critics, media personalities, and activists, saying "the prosecution has become a tool to go after the regime's opposition and intimidate it."

____

Associated Press reporters Amir Makar in Cairo and Matthew Lee in Washington contributed to his report.

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UK says efficiency steps to cut 11 percent from power bill rise by 2020

By Susanna Twidale

LONDON (Reuters) - Britain's government said household energy bills were headed for an 18 percent increase by 2020 but its policies promoting domestic energy efficiency, including its so-called Green Deal, would make the rise significantly smaller.

The average British household could face an energy bill of 1,496 pounds per year by 2020, according to a report published by the Department of Energy and Climate Change (DECC) on Wednesday, up from the 1,267 pounds it expects homes to pay this year.

If government schemes such as the Green Deal, which helps pay for energy saving home improvements, are successful, the average 2020 bill will be 11 percent cheaper than this forecast, the report said.

"With policies, bills are still going to go up, but they are going to go up by a lot less," energy and climate change secretary Ed Davey said at a briefing for journalists ahead of the report's publication.

The Green Deal is one of several government policies now in place that include plans to roll out smart meters - indicating which appliances use most power - replace inefficient boilers and encourage energy suppliers to help pay for roof insulations.

Overall these measures will knock 452 pounds from the average bill in 2020, DECC said, although this saving will be reduced to 166 pounds by the cost of other government schemes to boost renewable generation and levies on carbon emissions.

Britain's government came under criticism last year when each of the country's big six energy providers ramped up bills by up to 10 percent, blaming soaring wholesale gas prices.

British wholesale gas prices surged to a record high last Friday after one of its main gas import pipelines shut down unexpectedly. Davey said companies would not be able to use this as an excuse to up the cost for households.

"We will make it clear to energy suppliers that this is just a cold, temporary snap and is no excuse for putting up energy bills," he said.

(Reporting by Susanna Twidale; Editing by Anthony Barker)

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US to Add More Missile Interceptors to Counter North Korean Steps

Concerned by North Korea's long-range missile advances, Defense Secretary Chuck Hagel announced today that the United States is bolstering its missile defense system by adding 14 more ground-based missile interceptors.

The additional missiles will be in place by 2017 and will bring the number of long-range missile interceptors from 30 to 44, an almost-50-percent increase. Currently, 26 interceptors are based at Fort Greely, Alaska, and four more at Vandenberg Air Force Base, Calif.

Hagel cited recent North Korean actions as a motivator behind today's announcement and said the United States wants to "stay ahead" of any missile threats posed by North Korea and not have to react to North Korean developments.

Adding the 14 missiles "gives our country the security it needs and the people need to be reassured that that security is there," he said.

North Korea, he said, "recently made advances in its capabilities and is engaged in a series of irresponsible and reckless provocations."

He noted North Korea's third nuclear test in February, December's launch of a long-range missile that placed a satellite in orbit, and last year's public display of a road-mobile intercontinental ballistic missile known as the KN-08.

He expressed confidence in the ground-based missile interceptors that have been operational for more than eight years but have had some problems during tests.

"We are sure that we have the complete confidence that we will need," said Hagel. "But the American people should be assured that our interceptors are effective."

Hagel told reporters that the rationale for "advancing our program here for homeland security is to not take any chances, is to stay ahead of the threat and to assure any contingency. And that's why we've made the decisions that we have."

He added that the United States did not want to be in a position to react to North Korean missile development timelines but "that we're ahead of any timelines of any potential threat."

Deploying the additional missiles will cost less than $1 billion and will likely begin after another missile test that is scheduled for the fall.

Adm. James Winnefeld, vice chairman of the Joint Chiefs of Staff, told reporters at a Pentagon briefing that the U.S. has been watching North Korea's missile developments "very, very closely " and that the U.S. missile defense program could always be tweaked, if needed.

"So we have continually built this hedge, a set of tools from which we can select if the threat either goes faster or slower than we thought," he said. "And so the Korean threat went just a little bit faster than we might have expected. [We] very simply pulled the tools off the shelf, and those four tools are what we're announcing today."

In addition to 14 more missile interceptors, Hagel also included a previously announced move to send an additional TPY-2 early warning radar to Japan. He added that there would be a two-year delay in the roll-out of the SM3-IIB missile as part of the European missile defense shield designed to counter a potential threat to Europe posed by Iranian long-range missiles.

Hagel also announced that the Pentagon would be begin environmental impact studies to add more ground-based missile sites in the United States. The administration has not made a decision about an additional site, but Congress inserted language in this year's defense authorization bill that required the placement of such sites along the eastern seaboard of the United States.

The KN-08 mobile missile has been of particular concern to U.S. officials since six of the missiles were first displayed on mobile transports during a parade in Pyongyang last April. The mobility offered by such a launcher system concerns U.S. intelligence and military officials because it makes tracking the missiles more difficult, especially if they are being prepared for a potential launch.

Though U.S. officials were uncertain as to whether the displayed North Korean missile may have been a fake, Winnefeld said it "probably does have the range to reach the United States." He could not provide additional details because, he said, the intelligence assessment of where the North Koreans are in their development of the missile's launch capabilities remains classified.

On Monday, National Security Adviser Tom Donilon told the Asia Society that the U.S. will not "stand by while [North Korea] seeks to develop a nuclear-armed missile that can target the United States." He said the U.S. remained committed to ensuring peace on the Korean peninsula and, "this means deterring North Korean aggression and protecting our allies."

Donilon said the international community "has made clear that there will be consequences for North Korea's flagrant violation of its international obligations."

Last week, in fact, the U.N. Security Council unanimously approved new sanctions on North Korea after the nuclear test.

Winnefeld cited Donilon's comments about deterrence in explaining today's announcement.

"I think the national security adviser made it very clear in his speech on Monday that we not only intend to put the mechanics in place to deny any potential North Korean objectives to launch a missile to the United States, but also to impose costs upon them if they do," said Winnefeld. "And we believe that this young lad [North Korean leader Kim Jong Un] ought to be deterred by that. And if he's not, we'll be ready."

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Low-key departure as pope steps down and hides away

VATICAN CITY (Reuters) - Pope Benedict slips quietly from the world stage on Thursday after a private last goodbye to his cardinals and a short flight to a country palace to enter the final phase of his life "hidden from the world".

In keeping with his shy and modest ways, there will be no public ceremony to mark the first papal resignation in six centuries and no solemn declaration ending his nearly eight-year reign at the head of the world's largest church.

His last public appearance will be a short greeting to residents and well-wishers at Castel Gandolfo, the papal summer residence south of Rome, in the late afternoon after his 15-minute helicopter hop from the Vatican.

When the resignation becomes official at 8 p.m. Rome time (1900 GMT), Benedict will be relaxing inside the 17th century palace. Swiss Guards on duty at the main gate to indicate the pope's presence within will simply quit their posts and return to Rome to await their next pontiff.

Avoiding any special ceremony, Benedict used his weekly general audience on Wednesday to bid an emotional farewell to more than 150,000 people who packed St Peter's Square to cheer for him and wave signs of support.

With a slight smile, his often stern-looking face seemed content and relaxed as he acknowledged the loud applause from the crowd.

"Thank you, I am very moved," he said in Italian. His unusually personal remarks included an admission that "there were moments ... when the seas were rough and the wind blew against us and it seemed that the Lord was sleeping".

CARDINALS PREPARE THE FUTURE

Once the chair of St Peter is vacant, cardinals who have assembled from around the world for Benedict's farewell will begin planning the closed-door conclave that will elect his successor.

One of the first questions facing these "princes of the Church" is when the 115 cardinal electors should enter the Sistine Chapel for the voting. They will hold a first meeting on Friday but a decision may not come until next week.

The Vatican seems to be aiming for an election by mid-March so the new pope can be installed in office before Palm Sunday on March 24 and lead the Holy Week services that culminate in Easter on the following Sunday.

In the meantime, the cardinals will hold daily consultations at the Vatican at which they discuss issues facing the Church, get to know each other better and size up potential candidates for the 2,000-year-old post of pope.

There are no official candidates, no open campaigning and no clear front runner for the job. Cardinals tipped as favorites by Vatican watchers include Brazil's Odilo Scherer, Canadian Marc Ouellet, Ghanaian Peter Turkson, Italy's Angelo Scola and Timothy Dolan of the United States.

BENEDICT'S PLANS

Benedict, a bookish man who did not seek the papacy and did not enjoy the global glare it brought, proved to be an energetic teacher of Catholic doctrine but a poor manager of the Curia, the Vatican bureaucracy that became mired in scandal during his reign.

He leaves his successor a top secret report on rivalries and scandals within the Curia, prompted by leaks of internal files last year that documented the problems hidden behind the Vatican's thick walls and the Church's traditional secrecy.

After about two months at Castel Gandolfo, Benedict plans to move into a refurbished convent in the Vatican Gardens, where he will live out his life in prayer and study, "hidden to the world", as he put it.

Having both a retired and a serving pope at the same time proved such a novelty that the Vatican took nearly two weeks to decide his title and form of clerical dress.

He will be known as the "pope emeritus," wear a simple white cassock rather than his white papal clothes and retire his famous red "shoes of the fisherman," a symbol of the blood of the early Christian martyrs, for more pedestrian brown ones.

(Reporting By Tom Heneghan; editing by Philip Pullella and Giles Elgood)

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